Monday, January 12, 2004

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Depressing news story of the day

The Chicago Tribune reports that the Democratic candidates are falling all over themselves in Iowa to blame NAFTA for all of the state's economic woes. The highlights:

Trade has emerged as a potent political issue in Iowa in the final days before the state's Jan. 19 caucuses start the process of determining a Democratic presidential nominee....

All of the Democratic contenders' stump speeches call for at least modifying NAFTA and trade agreements with China, and some go so far as to talk about ending NAFTA and withdrawing the U.S. from the World Trade Organization [To be fair, I'm pretty sure Kucinich is the only one proposing anything in this last sentence--DD.]....

Indeed, Rep. Richard Gephardt of Missouri, who unlike his rivals battled NAFTA in Congress, told a crowd of union organizers and activists in Des Moines recently that Maytag was planning more Iowa layoffs and job shifts to foreign operations. The company has made no such announcement.

"You don't have to stir people on trade," said Donald Kaniewski, legislative and political director of the Laborers' International Union of North America.

"I represent a union that is not largely trade-sensitive, but the reaction of our members isn't just that they've bought into the whole labor thing on trade," Kaniewski said. "Our folks feel it in the places where plants have shut down. They see it in their lives and they understand it. Trade is an easy political sell, the easiest sell there is."

Bruce Babcock, a professor of economics and director of the Center for Agricultural and Rural Development at Iowa State University in Ames, said NAFTA and other agreements "probably sped" the natural consolidation of farming operations while opening new export markets for products.

On the manufacturing side, Babcock said complaints of job losses caused by NAFTA are "somewhat overblown," adding that a shift in jobs would have come about anyway because of globalization.

Babcock said Democrat and Republican rhetoric on trade is "just so far from reality." Democrats, he said, are moving so far toward a protectionist posture that President Bush can make marginal steps toward managed trade and still look like a free trader. (emphases added)

Unfortunately, that last sentence is dead-on.

posted by Dan on 01.12.04 at 10:23 AM




Comments:

that's true. bush is so far froma conservative politician he's practically a democrat.

posted by: jason on 01.12.04 at 10:23 AM [permalink]



Ain’t that something. I think Dan Drezner is starting to get it. The Democrat Party long ago excluded antiabortionists from become presidential candidates. Now they have added another litmus test: you must be an economic protectionist! The Bill Clinton of 1992 wouldn’t stand a chance in 2004. Where is Brad DeLong, Laura Tyson, and Robert Rubin when you really need them? Why are they so silent? Why do they spend so much time warning about the, admittedly legitimate, need to balance the budget while ignoring the far more important issue of trade protectionism?

The clincher for the Democrats may have been the two recent elections in Louisiana. In both cases, the Republican candidates were leading in the polls. At the very last minute, a liberal operative used the protectionist card---and the Democrats won both the U.S. Senate seat and governorship. In a number of states, this is an issue that can hurt President Bush. People are innately selfish and often could care less about advancing policies to aid the greater good. They worry, first, last, and foremost, about themselves. I can easily present an macroeconomic argument why free trade is best for the vast majority of Americans. Unfortunately, I am utterly incapable to alleviate the realistic concerns of those (especially the poorly educated blue collars) who will pay the immediate price of unemployment.

posted by: David Thomson on 01.12.04 at 10:23 AM [permalink]



Bill Clinton ran as a protectionist in 1992. He just lied.

posted by: Brian Ulrich on 01.12.04 at 10:23 AM [permalink]



Why do those who so love the UN, so hate the WTO? Why do those who worship at the altar of Kyoto never have been able to find a trade deal that meets their standards?

I'm just noting the inherent conflict inherent in the ideology of the Democratic wing of the Democratic Party. I'll let others wrestle over it.


posted by: appalled moderate on 01.12.04 at 10:23 AM [permalink]



I've noted elsewhere my view that support for free trade is declining generally. However, Iowans -- especially those likely to show up at Democratic caucuses -- are probably more likely to respond to protectionist appeals than voters, even Democratic voters, in other states.

Trade, like ethanol, illustrates how much Democratic candidates are influenced by their party's insistence on placing so much emphasis on the same early primary states every four years.

posted by: Zathras on 01.12.04 at 10:23 AM [permalink]



Democrats, he said, are moving so far toward a protectionist posture that President Bush can make marginal steps toward managed trade and still look like a free trader.

Something to consider is that most POTUS end up supporting some form of managed trade which entails some liberalized trade in exchange for some protections in other areas. It's part of the horse-trading of politics.

Former President Clinton did much the same with NAFTA and GATT (a lot people forget that he was a critic of it during the 1992 campaign) - neither of which are actually "free trade" in that they kept protectionism in some areas while liberalizing trade in others.

President Bush 43 seems to be doing much the same in order to liberalize trade with Latin America, get Fast Track authority (something his predecessor failed to do), and expand trade with African continent. The price for this seems to be some tarrifs on steel (which are or are being repealed) and textiles.

posted by: Thorley Winston on 01.12.04 at 10:23 AM [permalink]



I've noted elsewhere my view that support for free trade is declining generally. However, Iowans -- especially those likely to show up at Democratic caucuses -- are probably more likely to respond to protectionist appeals than voters, even Democratic voters, in other states.

I think it depends on which part of the State you are living in. I live in Minnesota and have lived in and been active in three different Congressional Districts. My home district which is one of the most rural in the State tended to attract more of the protectionist elements whereas the more suburban districts tended to attract more of a pro-trade liberalization crowd. Unfortunately as many have noted, the benefits of trade are more widespread and dilluted while the benefits of protectionism are more concentrated. People with a protectionist bent (much like those who receive a particular government subsidy) have more motivation to protect their benefits than those of us who pay for it.

Trade, like ethanol, illustrates how much Democratic candidates are influenced by their party's insistence on placing so much emphasis on the same early primary states every four years.

Ethanol is a bi-partisan scandal which no sense either economically or energy-wise (it takes about 40% more energy to create ethanol than you get from it). Unfortunately many people have this myopic affection for the "family farm" and ethanol-proponents have successfully (albeit dishonestly IMO) drawn a comparison between giving someone a direct subsidy (ethanol tax credits) versus letting a company depreciate its inventory (oil deprecation allowance) and "family farmers" are lot easier to sell politically than "Big Oil."

posted by: Thorley Winston on 01.12.04 at 10:23 AM [permalink]



It's probably too late for Dan to convince Jacob Levy to start Libertarians for Lieberman, isn't it?

posted by: Hei Lun Chan on 01.12.04 at 10:23 AM [permalink]



Can I hope that they might change their tune when they stop trying to woo the farmers in Iowa?

Is that any more delusional than hoping that Bush will reduce the deficit?

What does it take for intelligent policy to win out over least common denominator politics?

posted by: Rich on 01.12.04 at 10:23 AM [permalink]



It's probably too late for Dan to convince Jacob Levy to start Libertarians for Lieberman, isn't it?

Arnold Kling came the closest in one of his recent articles but retracted it when Lieberman began proposing federal regulations on what people were allowed to eat.

Even though Lieberman is more pro-trade, Bush is a lot more libertarian leaning on issues such as Social Security reform, taxes, gun rights, property rights, racial preferences, freedom of speech (Lieberman authored the V-chip legislation), school choice, etc.

posted by: Thorley Winston on 01.12.04 at 10:23 AM [permalink]



Why do those who so love the UN, so hate the WTO?

Why do some who (properly) despise the UN not feel similarly toward the WTO? Free trade means that I can buy stuff from home and abroad without having to deal with any government red tape other than calculating any taxes involved in the transaction. Free trade doesn't need an NGO bureaucracy.

posted by: Alan K. Henderson on 01.12.04 at 10:23 AM [permalink]



I am very disturbed by the tone and direction the debate on free trade has taken in this country recently. I keep telling myself that this is a normal occurrence at the end stages of a recession/period of slow growth and that when employment starts picking up this will all die down. That certainly happened in the early 90's when everybody thought that the Japanese were going to buy America and we were going to end up as second class citizens caddying Jpaanese businessmens golf bags around Pebble Beach. A few years later that was all forgotten, especially as it became clear that the Japanese actually had a very poor economic model.

But this time the tone is different. The average person isn't concerned that American business isn't competitive enough, they are worried that American business is TOO competitive. Throughout history this kind of popular sentiment has lead to diasterous government economic policies that have hampered our country for generations. Have you watched CNN's Moneyline with Lou Dobbs lately? It looks like it is being broadcast from the home office of the AFL-CIO, not Wall Street.

I live on the North Carolina-South Carolina border so I have seen the combination of the (long overdue) death of the textile industry coupled with cyclical layoffs in manufacturing turn the most conservative Republicans into outright protectionists. This phenomenon is perdictable because it wins votes. These people who have seen these 100 year-old mills close don't understand how international trade works, all they see is a Chinese guy who they think stole their job. These people don't know who Ricardo is and don't even know the phrase "comparative advantage". They just know they are out of work and will vote for anybody who promises to punish those who were responsibile (which is actually each and every one of us in some small way, which is who will be punished).

The most disturbing thing is what you hear from people who SHOULD know better. I expect this kind of stuff from Dick Gephardt. But Paul Craig Roberts? He's supposed to know better. I hadn't read any of his stuff in years, so when I came across some articles he wrote on the subject I thought to myself: "Finally, somebody is going to argue that the problem here is too much government." Boy was I in for a shock. I'm still yet to hear the correct answer from Roberts (who ironically was one of the people whose articles influenced my thinking in my formative years on these subjects): Lower taxes, lower regulation, and fix our broken Judicial system while your at it. Instead all I hear is protectionism.

Very, very disturbing. Those jobs that every economic indicator is pointing to better show up quick or this country is going to permanently debilitate itself.

posted by: DSpears on 01.12.04 at 10:23 AM [permalink]



For all the left's trying to put across the idea that Bush is far right, he's a nazi, etc,etc, etc... the fact was, is, and will remain that Bush has always been a centerist. So, too, was his father.

And this thread points out some things brought up in another... namely, how far left the Democrats have gone.

Think on it this way; Bush is at the middle... and the knee-jerk Democrat is going to tilt left of whatever the Republicans come up with, thus having, in the end, the effect of pushing the Democrats off the national political stage, to the left. (Exit, stage left!)

Put another way, the only reason Dan's line is true..." President Bush can make marginal steps toward managed trade and still look like a free trader. " is because relative to the alternative, he IS a free trader.

posted by: Bithead on 01.12.04 at 10:23 AM [permalink]






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